In describing the work of hedge funds, financial journalist Sebastian Mallaby has observed: [Research] showed that the

Question:

In describing the work of hedge funds, financial journalist Sebastian Mallaby has observed: [Research] showed that the unglamorous “value” stocks were underpriced relative to overhyped “growth” stocks. This mispricing meant that capital was being provided too expensively to solid, workhorse firms and too cheaply to their flashier rivals…. It was the function of hedge funds to correct inefficiencies like this.
a. Explain what the first two sentences in this excerpt mean: What is the connection between the relative prices of these two types of firms and their cost of raising capital? Who is “providing” capital to these firms?
b. How can hedge funds correct this inefficiency?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...